You may have an inkling that you are getting into a debt hole that you may not be able to get out of. But, how can you know how much debt you are in and how you can get out of it. There are a number of tools out there that can show you your debt present and how long it will take you to get out of debt. There is a great tool out there now called the debt calculator that can help you get a bird’s eye view of your debt and how long it will take you to get rid of that debt hanging over your head.
Debt Calculators and Credit Cards
There have been a number of legislations that have been enforced on credit card companies that force credit card companies to display on your bill how long it would take you to pay off your debt if you only made the minimum payments. This helps consumers get a view of how long it would take to get your balance down to zero and out of the red.
- How Long: Now that you have made up your mind to pay off your debt, a debt calculator can help you determine how long it would take you get pay off your debt. Taking into account your current balances, the interest rates and the amount of money you can pay towards your debts, a debt calculator can make estimates on how long it would take you to be debt free.
- Make more than just minimum payments: While the debt calculator will show you how long it would take you to get out of debt making just bare minimum payments, it can also show you what the impact of more than minimum payments can be. Making more than just minimum payments can shave off as much as 2-3 years off your repayment plan and get you out of debt sooner. In addition, you will have to pay that much less in interest payments and late fees. Lesson on hand- try making at least double the minimum payments in order to make a dent on your debt.
- Set a deadline: Well, if you have made a new year’s resolution to get out of debt and need to be out of debt by year’s end, a debt calculator can also show you how much in payments you will have to make to be debt free by the end of the year.
- Plan your future: You don’t necessarily have to be in credit card debt for a debt calculator to be helpful to you. Consider that you are retiring in five years and want to be debt free or that you are just out of college and need to pay off your college loans as soon as possible. You can use the debt calculator to determine an effective payment plan for yourself and be debt free when you want to be.
What You Can Do Once You’ve Calculated Your Debt
- Once you know how much debt you are in, it is necessary to know that the one sure fire way to get out of debt is to stop getting into it in the first place. Stop using credit cards as a primary mode of payment and try to pay off your bills using money from your paychecks
- Once you are out of debt, make sure you pay off your bills in full every month so you do not owe anyone any more money.
- Live on a budget. While a lot of financial gurus put this forth, not a lot of people do it. It is necessary for you to understand that living on a budget is the one sure fire way to stay debt free and still live well.
- If you are looking at paying off large debts like mortgages, try making extra payments towards those huge loans when you can. For example, if you get a tax rebate every year, use a portion of the tax rebate to pay off your debt.
- If the reason you were in debt was unaccounted spending, try getting help from a credit counsellor who can provide you with advice on how you can remain away from debt.
All in all, a debt calculator can be a great way to plan your debt free future and pay off your debt sooner. But, a debt calculator can only be useful if you implement some sound financial decisions into your debt free future as well. You need to be able to stay out of debt in order to bring peace of mind to your life and secure your family’s future. Whether these financial strategies come from your own self resolve or through credit counselling is up to you, but putting them into practice is entirely up to you and that is a responsibility all in itself.